The Finish Line Keeps Moving for This Primary Care Physician


She ran the numbers. Looked good. But what about… shoot! Not so good. The end is in sight; she should be able to retire soon, but the finish line keeps moving on her.

I think what she’s going through is certainly common, and I was guilty of the same number crimes when I first discovered financial independence. We were spending about $70,000 a year at the time, but I hadn’t factored in much for taxes or big-ticket items that we mostly avoided that first year I started tracking.

There’s also the possibility that spending could go down after retiring, particularly if you’ve currently got kids at home that will eventually be self-supporting rather than eating you out of house and home. Anyway, the key is to think about all contingencies, and that is what today’s post is all about.

This article, from a primary care physician, was originally published on her personal finance blog, Physician in Numbers.




This July I took a lovely vacation, longer than I have had off in a while. I visited family, saw new places, and actually relaxed for a few days. I would love to do that more often.

On my return, I was soon working in the hospital with July interns. It was intense–both good and not so good–but exhausting. Everything that was not medicine went by the wayside: exercise, reading new books, watching suspenseful miniseries (I can’t wait to get back to The Night Manager).

Both experiences have left me wondering where my finances are vis a vis readiness for retirement.

I was thinking about this last summer also, and I think it is time to revisit that question: are we there yet? With the corollary: how can I figure out where the finish line is?

Join me as I walk through my rough calculations and figure out what I am still missing.


The Nest Egg and the 4% question


The simple answer to: are we there yet? is that if you have savings of at least 25 times your annual spending (25x), you should be able to retire at your current level of spending and never earn another dime. The harks back to a paper by William Bengen suggesting that a withdrawal rate of 4% of a portfolio (split between stocks and bonds) over 30 years should have a low rate of failure.

Since 4% of 25x is X, we get the inverse truism, that having a nest of 25x your yearly spending should last you through a 30 year retirement.

There are arguments all over the internet whether 25x is fine, or if 30x or 33x [your annual spending] is safer, but the principle is the same.


Garbage In, Garbage Out


My problem last summer was that I thought I had 25x my annual spending, but when I looked more carefully, there were many things I had left out of my spending totals: real estate taxes, charitable spending, big-ticket house repairs, health insurance, and income taxes on my investments.

Disheartened, I took another look at my spending estimates, and I was able to identify some expenditures that would go away in retirement, like staff gifts and CME (assuming I am ready to give up my medical license).

Nevertheless, it looked like I would need to wait at least 3 -5 years to let my yearly savings accumulate and my investments appreciate, to get anywhere close to my “goal” nest egg. I say “goal” because I still hadn’t addressed several other big issues (health care, taxes).

Here we are in 2021, after a year of paying real estate taxes out of my checking account (rather than the mortgage escrow account). Prices for groceries have gone up, and so have my utilities.

On the other hand, the stock market has been going up like gangbusters.

So where are my finances?


An Updated Number


To come up with this number, I added up my liquid assets I was planning on spending in retirement:

Then I looked at my monthly spending for 2020, subtracting my work expenses and also increasing funds for travel. (I spent only $12 a month on travel in 2020, and I hope to spend much more than that once I retire!)

I came up with assets equal to 29x my spending.

Am I done? Should I tender my resignation today?

Probably not. There are still a number of future expenses I realize I still have left out of my calculations.


They, too, are working hard to get to their finish line.

Calculating Future Expenses


Last year I realized I had overlooked a number of expenses as I calculated our monthly (or annual) expenses.

I addressed, at the time, our property taxes, home insurance, charitable contributions, and hoped-for travel plans.

I passed over three other categories of expenses: the large lumpy costs (for example: roof repair, new car, replacing big home appliances), health insurance, taxes on the investments we are planning to live on.


Which expenses did I remember this year?


This year my yearly spending includes the property taxes and home insurance.

Sometime soon, I will be setting up a donor advised fund, based on my accountant’s recommendations. You can read about this at Physician on Fire, but I will donate appreciated stock to–essentially–my own tiny foundation at a brokerage. I will get the tax break now, but can actually give the money to charities later.

This will reduce my nest egg by 1/2 x my annual spending (or 1x, or 2x), but will make sure that I have money to give away throughout my retirement. I can leave my charitable donations out of my spending calculations, even though I will still be able to give money away.


Figuring Out Lumpy Costs


A number of years ago I read a blog post talking about forecasting lumpy expenses. Of course, I can’t now remember who wrote it.

I thought it was a great exercise to think about expenses that you might have only once or twice in retirement, that aren’t really optional. I recall a table, set up something like this, noting the expense, and how often (in years) the expense might pop up:


FYI, I totally made up all those numbers


This would suggest that I should plan for an extra $8,880 a year in costs. They probably won’t come evenly, so I should put this money aside for when they hit (hopefully not all at once).

My big worry is that this list is not complete, and that I am missing several costly items. Of course, I should probably spend more than 10 minutes researching durability and cost when I put together this table for real.

I think focusing on this in the coming year will be a good project.

I may be able to avoid some pain of these costs by making sure I take care of the most expensive items before I retire.

Though I am not looking forward to replacing the central AC, fixing the roof, and (possibly) replacing our aging stove and refrigerator, getting this all done while I have an income should reduce our chances of having to cough up a ton of money right after I stop bringing home a paycheck.

Health Insurance


This is still a difficult cost to forecast.

The price of insurance just seems to be going up and up; often with coverage shrinking just as quickly.

Our options are better than they were 15 years ago. The ACA did away with being denied coverage due to pre-existing conditions.

I hear that premiums for ACA plans are now capped at 8.5% of income, with subsidies covering the rest, but so far that is temporary for this year. It is not clear that this will continue (though I sure wish it would).

I think I will still punt calculating our health insurance costs for retirement while ACA subsidies are in flux. As retirement gets even closer, I will need to start shopping for insurance and see how our budget tolerates it.

In the meantime, I will take advantage of employer-sponsored insurance and keep saving more money for when I finally need to buy it on my own.



As the saying goes, nothing is certain, except death and taxes.

For sure, Uncle Sam will be expecting us to pay taxes in retirement. So will my current state government.

There is plenty of variability in what I can expect to pay, and that’s not even taking into account the likelihood that tax rates will certainly change over the next 20 to 40 years.

The real truth is that my nest egg is not really going to support 29x our current annual spending.

Money from my tax-deferred accounts will be taxed as ordinary income when I pull it out. Depending on my total income for the year, this could mean taking a 12-24% haircut on those funds.

If I sell stocks from my taxable account, I will (probably) pay 15% on my gains. This means I have the ability to manipulate my taxable income for the year and thus change the taxes I pay.

Put another way, I could sell $80,000 of stock and pay about 15% if the basis is very, very low; or maybe really just 7.5% if the stock has doubled since I bought it (so half of the money is just return of my basis), or possibly I could get a rebate on my taxes if the basis for the stocks was higher than $80,000. That is to say, if I lost money. Lots of variabilities here.

Lastly, the money in my Roth IRA will be totally tax free. Sadly, there isn’t nearly as much in this account as in the other.

At some point this year, I will need to decide how I want to adjust my nest egg calculation to account for the tax burden. I suspect I will find I have lost 3-4x my spending to taxes.



Future Work


I can see that I still have plenty of work to do before I can figure out how much money I need to retire (or at least, to feel comfortable retiring).

From my estimated nest egg 29x annual spending, I’ve knocked off 0.5 to 1x for a donor advised fund, and maybe another 3-4x for taxes. Now I’m down to 24.5-25.5x, which is almost in the good range. This assumes that we don’t have a drop in stock prices: a 20% drop means I lose 6x right off the top.

I still haven’t accounted for those lumpy costs. I will need to complete my estimates this year.

Not to mention figuring out what to do about health care coverage.

I sense another few years of work and employer-provided health insurance before I get to retire.

Help a blogger out: what big expenses fell into my blind spot that I need to add to my table?


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14 thoughts on “The Finish Line Keeps Moving for This Primary Care Physician”

  1. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  2. The lumpy costs are real! I’m on the cusp of being FIRE at 49, but will likely work for a few more years due to my uncertainty about my retirement number. Since July we had to replace:

    Air conditioner (at same time decided to do furnace and air exchanger since 20yrs old)
    Hot water heater (only 5yrs old)
    Washer/dryer quit this weekend
    Extra refrigerator

    Total will be around $17,000 for all.

    Even though our house is 20yrs old, did NOT expect to have to change all this in the span of 4 months. Very glad I am still working and we keep a large cash cushion!

    • Holy moly, DL, that’s a lot of machinery conking out at the same time!

      We keep a house repairs fund (also now reserved to pay taxes), but that would overwhelm our house savings. I can see the appeal of working a bit longer and saving up for those lumpy costs. Though hopefully you won’t have too many left once this is taken care of, at least for a few years.

      • Funny thing, last week our coffee maker broke too 😂. Again, thankfully, no sweat on being able to cover those expenses. However, I have been trying to convince my husband to move in the country on a few acres, but now we have all these new appliances, so he has even less incentive to move!

  3. Do not overlook enrolling in a Direct Primary Care practice for your medical needs. This decreases medical costs a lot. Typically it’s a flat monthly fee for you and your family (often the fee is based on age). Heavily discounted labs included. Depending on the state, these practices can dispense basic medications. Then you can use a high deductible plan for your major expenses. The vast majority of people find their health care costs are lowered this way.

    • Hi Sue,

      thank you for the suggestion. Unfortunately, I need expensive meds and Mr. PiN has had an expensive health scare. I anticipate we may have more expensive care coming up in the future (I would be happy to be wrong). Right now, I live near and work for the flagship university hospital in the health system, and I am daily amazed by what we can offer patients and what it likely costs. I am more comfortable planning for comprehensive health coverage, for us.

      • I love the table with the major expenses amortized over expected lifespan, great idea!
        I’ve rehabbed a good amount of houses, the numbers are reasonable other than the roof and furnace that seem high unless you have a large/unique house or live in an expensive market.
        I have two questions:
        1. Are you counting primary home equity in this equation?
        2. How do the numbers change if you add a semi-retirement period of 3-5 years? Many docs prefer to ease into retirement.

        • Hi Bill,

          To answer your questions and comments:

          1. I am not including primary home equity in this equation. We have to live somewhere, and we love our house. I have a feeling that if we were to sell and move to a home (apartment), we would probably end up wanting something that costs about as much. If we actually get cash out and lower monthly bills, that can be a bonus.

          2. As far as a semi-retirement, I did run some numbers in August 2020, looking at differing levels of retirement savings, but I did not include the option of saving nothing at all. In 2020, going full-on Coast FI (earn only enough to live on) would, I think, have added 3-7 years to my required work life. I did not run the numbers for 2021. I have cut my hours slightly by now, but if I revisit the question next year, I will take this into account.

          Thank you for the questions/comments.

  4. Long Term Care costs.
    Either the purchase of an LTC policy or self funding.
    I would also point out that the 4% rule was developed accounting for periods of time where the market went down 20% and more. As Michael Kitces has written, the vast majority of times the 4% rule will not only work for 30 years but leave your principal intact.

    • Yes, I will put this on my list of things to worry about. I am dealing with 2 sets of aging parents, so this sort of thing is on my mind. I have been assuming this would have to be self-funded, but I haven’t really thought about how to plan for that (except for having more money).

  5. Taxes: If you take money from tax deferred accounts up to either your standard deduction or your itemized deductions (whichever is higher), you’re not taxed on that. Take the rest of your annual spending from taxable accounts, making sure to keep your taxable income under $40k, and your capital gains tax is 0%. It makes sense to withdraw strategically to minimize taxes.

    • This is the sort of approach I have been thinking about. However, tax laws can change at any time–and I’m not quite at the age at which I can access my retirement funds freely. I expect to have a plan to match the strategy more firmly nailed down…in a few years.


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